The dollar index slipped below 97.8 on Wednesday, surrendering part of the prior session’s gains after President Donald Trump signaled no change to his tariff strategy in the State of the Union address. Trump expressed confidence that foreign governments would honor existing trade deals and even floated the idea that tariffs could eventually replace income taxes.
On Tuesday, the United States began enforcing a temporary 10% global tariff, which the White House is reportedly seeking to raise to 15%, following the Supreme Court’s decision to strike down Trump’s earlier reciprocal tariff measures.
In monetary policy developments, Susan Collins indicated that keeping interest rates unchanged remains appropriate given an improving labor market and ongoing inflation risks. Thomas Barkin similarly commented that current policy is well-positioned to navigate economic uncertainties. Even so, markets are still pricing in about three 25-basis-point rate cuts from the Federal Reserve over the course of this year.
